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An immigration squeeze in the UK and France is deterring students and forcing business schools to widen the search for recruits, deans have warned.

The UK’s coalition government came into office in May 2010 promising to cut net immigration – the difference between those arriving in the country and those leaving. It scrapped visas ­allowing students to work after graduation, and made study visas harder to obtain, processing them at overworked consulates in the countries of application.

Michael Luger, director of Manchester Business School, spoke out against the changes at the time, but says the impact has been even greater than he feared.

“Last year, I predicted that the new immigration rules, especially the expiration of the post-study work visa, would reduce enrolments in postgraduate programmes by approximately 10 per cent at MBS, since we were not prepared to lower admission standards,” he says.

“In fact, our full-time MBA and postgraduate taught [PGT] enrolments this year are below our targets by 18 per cent and 3 per cent respectively. Similar results are reported by other business schools in the UK.

“It is not surprising that the MBA numbers are down more than PGT, because those students are more likely to seek professional placements in the UK after they receive their degrees. So the removal of the post-study work visa makes it harder for non-EU graduates to stay, which reduces the attractiveness of the UK as a place to study.”

At Leeds University Business School the impact of the visa changes has been less immediately obvious. Peter Moizer, the dean, says it is too soon to tell. “There are lots of conflicting trends, so I think it will be some time before we can discern the impact. Our numbers have held up.”

The trend of flattening demand from China, as more of its students stay at home, and growing numbers from India, has continued.

“I don’t think the Indian students coming on the MBA recognise that [the working visa has been scrapped],” says Prof Moizer. “They expect a couple of years working in Europe to pay off their loan. The best they can hope for is four months.”

British deans are concerned that the changes send out a message that the UK is closed for business while other countries’ doors remain open.

“The Department for Business, Innovation and Skills [responsible for universities] gets it,” says Prof Moizer. You have got a £1bn ($1.6bn) industry creating goodwill for Britain across the world. BIS understands, but the Home Office has a target. The simplest way to meet it is to reduce student numbers.”

Nearby Bradford University School of Management relies heavily on overseas students, especially from India and Pakistan, from where the city has many immigrants. Around 18 per cent of students at the university are from outside the EU.

The grandes écoles in France are similarly affected. Judith Bouvard, dean of Grenoble Graduate School of Business, says it is continuing to lobby for changes after a clampdown on visas.

“We have had fewer non-EU students this year and numbers overall are slightly down,” she says, adding that the number of EU students has stayed about the same.

“Before, students in France who had a master’s degree would work for a couple of years. It is getting more difficult to stay in France.”

One difficulty is that there is a French language test to get a visa, even though the school teaches its students from more than 100 countries in English. “We have explained that,” she says. “Little by little we are getting the message across.”

But even when the interior ministry allows in a student, local authorities might not issue residence and work permits. “It is very vague and rather haphazard,” she says.

Spain remains more open to immigrants. Iese, the University of Navarre’s business school, has seen rising numbers of students from overseas, including the US and India.

Some 53 per cent of Iese’s MBA ­students this year came from outside the EU, up from 36 per cent in 2007, and the number of Asian students has increased from 4 per cent to 20 per cent in a decade. Nearly three-quarters of applications came from outside the EU.

Professor Pedro Videla, the aca-demic director of the MBA programme, says: “It is no worse today than it was five years ago. We have not had the changes you see in France and the UK.”

He adds that the visa crackdown elsewhere was self-defeating. “This is internationally mobile capital. Any economist would tell you it is wrong to allow it to go elsewhere.”

Australia is becoming an increasingly popular destination, after business schools convinced the government to scrap restrictions on student immigration.

Grenoble has found that its campus in London has offered a solution. Some students who cannot get into France go to London, and vice versa.

Manchester is also using its overseas offshoots, offering part-time MBAs for students who might not be able to get into the UK. Prof Luger says: “If students from Singapore, Hong Kong, Shanghai, the UAE, the US and Brazil are less likely to come to the UK, we can go to them through our centres in those locations.

“I will continue to lobby government to relax the immigration laws affecting students,” he adds. “And MBS will redouble its efforts to recruit non-EU students to Manchester from all parts of the world … We will also focus more attention on European students who do not have to have a work visa to stay in the UK.”

However, Prof Moizer says Leeds will not go down the overseas centre route because he could not guarantee the same standards even if it boosted income. “Universities are not in business to make profit,” he says.

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It’s different down under

Australia changed its visa regime in October, after a drop of almost a quarter in overseas student numbers over three years, partly because of tighter immigration controls. The country also reinstated the right to work for between two and four years depending on the level of qualification, and announced plans to speed up processing applications.